Waste of money, because the engine would be in-house and they'd have to look for another.

Yes and no.

I haven't said Nintendo buys Crytek and uses the Cryengine. They could negotiate a deal to get Crytek develop a variant of its engine optimized for the WiiU hardware and offer it to both its internal studios but also third parties.

Nintendo would have a powerful engine tailored for its hardware for a lot less money than what would cost to make it on their own and at the same time it could incentivate more 3rd parties that are already using the Cryengine to port their games to the WiiU. And Crytek would get a much needed money injection as well as the chance of seeing more studios licensing their engine as a result of someone like Nintendo using it.

But as I said with that j/k, I don't think this will happen.

I was also kidding, taking literally what was stated before, but you bring in some interesting points. You did give it some thought

I had to defense my position, no matter how little I believe in it .

Standard development tools means quicker porting between systems and easier development since programmers only need to specialize and consequentially be more efficient in a specific set of tools instead of 10 different ones. It also goes in to place with Nintendo's plan to integrate the devlopment environment of both their future handhelds and home consoles.

Sounds good to me.

They are expected to spend less on R&D in the coming year, last year's expenses were the highest it's ever been.  

Research and Development expenses from latest financials -FY 2013 (ended March 2014)- below:

R&D expenses were around 53,000m yen a year from 2011-2013.  So they want to return close to that 2011-13 level of spending.

I guess that will put an end to the hopes (to call it something) that some had of Nintendo launching a new console in 2016.

Hard to gauge anything from that really, since YE March 2013 should be the highest since that's where the Wii U launched, yet it's lower than the following two years. 

I think Wii U is probably Nintendo's last "traditional" home console in a lot of ways any how. They will simply just make one handheld platform with a way to play that on the TV as a side functionality going forward I think and then branch off into the Quality of Life, licensing (movies, merchandising, etc.),  and the toy biz (amiibo) in the future as their alternate business pillars. 

I believe they've denied this recently, no?

Not to my knowledge.